The Conference Board Consumer Confidence Index rose in May to 102.0 (1985=100) from 97.5 in April (a slight upward revision).
The Present Situation Index — based on consumers’ assessment of current business and labor market conditions — increased to 143.1 (1985=100) in May from 140.6 in April.
Meanwhile, the Expectations Index — based on consumers’ short-term outlook for income, business, and labor market conditions — rose to 74.6 (1985=100) from 68.8 last month.
Despite the improvement, for the fourth consecutive month, the Expectations Index was below 80, the threshold which usually signals a recession ahead.
“Confidence improved in May after three consecutive months of decline,” said Dana M. Peterson, chief economist at The Conference Board. “Consumers’ assessment of current business conditions was slightly less positive than last month. However, the strong labor market continued to bolster consumers’ overall assessment of the present situation. Views of current labor market conditions improved in May, as fewer respondents said jobs were ‘hard to get,’ which outweighed a slight decline in the number who said jobs were ‘plentiful.’ “
Peterson added, “Looking ahead, fewer consumers expected deterioration in future business conditions, job availability, and income, resulting in an increase in the Expectation Index. Nonetheless, the overall confidence gauge remained within the relatively narrow range it has been hovering in for more than two years.”
Compared to last month, confidence improved among consumers of all age groups, Peterson said.
In terms of income, those making over $100K expressed the largest rise in confidence.
On a six-month moving average basis, confidence continued to be highest among the youngest (under 35) and wealthiest (making over $100K) consumers.
According to May’s write-in responses, consumers cited prices, especially for food and groceries, as having the greatest impact on their view of the U.S. economy, Peterson said.
Notably, average 12-month inflation expectations ticked up from 5.3 percent to 5.4 percent. Perhaps as a consequence, the share of consumers expecting higher interest rates over the year ahead also rose, from 55.2 percent to 56.2 percent.
"Meanwhile, consumers’ assessment of their family’s financial situation both currently and over the next six months (measures not included in calculating the Consumer Confidence Index) deteriorated slightly,” Peterson said.
The survey also revealed a possible resurgence in recession concerns. The Perceived Likelihood of a U.S. recession over the next 12 months rose again in May, with more consumers believing recession is ‘somewhat likely’ or ‘very likely.'
This contrasts with CEO assessments of recession risk: according to the CEO Confidence survey, only 35 percent of CEOs surveyed in April anticipated a recession within the next 12 to 18 months.
Consumers were nonetheless upbeat about the stock market, with 48.2 percent expecting stock prices to increase over the year ahead, compared to 25.4 percent expecting a decrease and 26.4 expecting no change.
On a six-month moving average basis, purchasing plans for homes were unchanged in May at their lowest level since August 2012.
While still relatively depressed, buying plans for autos rose slightly for a second month, and buying plans for most big-ticket appliances increased for the first time in several months.
Meanwhile, buying plans for electronics products were largely unchanged except for smartphones, which saw renewed interest.
